There is no question that the so-called “FANG” stocks — Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN), Netflix (NASDAQ:NFLX) and Google-parent Alphabet (NASDAQ:GOOG, GOOGL) — have been on a tear this year and in the last 12-months, adding to their impressive outperformance in recent years. In fact, on a year-over-year (y/y) basis these big tech names have appreciated nearly 65% as a group, leaving the S&P 500’s 13.8% rise during the same period in the dust.
CNBC however, notes in an article that the high-flying FANG group is set for significantly slower price growth. Based on average 12-month price targets, and calculated returns to those targets for each stock, Wall Street analysts see the group appreciating just 5.4% in price over the next year.
Facebook, Amazon, Netflix, and Alphabet stocks are up about 31%, 84%, 118%, and 26%, respectively, y/y. The average Street analyst believes that over the next 12 months Netflix stock will return just 2%, Amazon stock will return less than 5%, Alphabet will return 6.1% and Facebook will return 8.8%.
The latest predictions come just a day after Netflix’s earnings report. The streaming platform reported second-quarter financial results on Monday that disappointed investors with softer subscriber growth both within the U.S. and overseas, renewing fears that growth may sputter. The results have so far prompted nine analysts, including Merrill Lynch, UBS and Deutsche Bank to lower their NFLX price targets.
In a research note, GBH Insights’ Daniel Ives called the 2Q “a near-term gut punch” to the Los Gatos, California-based company.
Commenting on their newly reduced Netflix price target, Deutsche Bank said upside for Netflix stock is limited for the next year as subscriber growth slows.
Deutsche’s new $350 from $360 NFLX price target is among the lowest on Wall Street. In contrast, Goldman Sachs (NYSE:GS) cut its NFLX price target only to $470, noting they believe that “the impact to investor expectations for LT subscriber growth should be negligible.” Meanwhile, Bernstein’s Todd Juenger increased his NFLX price target to $434 from $372 writing: “Everybody knew the day would someday come when Netflix would fall short of quarterly subscriber expectations.” (Netflix gained 5.1 million subscribers worldwide during the second-quarter, more than 1 million below expectations).
“For those who wanted an entry point, here it is.”
Shares of Netflix plunged by about 14 percent to $345.65 in extended trading Monday, printing their worst day in nearly two years.
As of writing, NFLX is changing hands at $377, down 24 points, or 5.9%.
Leave a Reply